SCOTUS rules ‘implied certification’ may be grounds for False Claims Act whistleblower lawsuits

by Eric Pearson

The Supreme Court has ruled that a federal contractor’s Medicaid claims may be held illegal as part of a qui tam lawsuit filed under the False Claims Act even in cases where payment conditions were never explicitly stated. This doctrine, known as “implied certification,” expands the definition of fraud against the federal government that can be reported by qui tam whistleblowers as part of a lawsuit filed under the False Claims Act.

In an opinion authored by Justice Clarence Thomas, the Supreme Court ruled in a unanimous 8-0 decision in Universal Health Services, Inc. v. United States ex rel. Escobar that “the implied false certification theory can, at least in some circumstances, provide a basis for liability.” The Court’s ruling rejected the efforts of medical industry groups that filed amicus briefs opposing efforts to apply the theory of implied certification to qui tam litigation.

The case before the Supreme Court involved a lawsuit originally filed by Julio Escobar and Carmen Correa, the parents of Yarushka Rivera, who died after several years of receiving counseling and medication from Arbour Counseling Services. Rivera’s parents alleged that Arbour violated numerous Medicaid regulatory requirements by performing unlicensed treatments on their daughter and by failing to properly supervise nurses and staff.

Rivera’s parents filed a qui tam whistleblower lawsuit against Arbour and Universal Health Services, the company that operated the counseling center. The lawsuit was dismissed by the trial court, which held that none of their False Claims Act allegations were “conditions of payment” that could form the basis of a qui tam lawsuit. This ruling was reversed by the United States Court of Appeals for the First Circuit, which held that Arbour had implicitly represented that it was in compliance with Medicaid treatment requirements merely by submitting claims for payment to the program. The Supreme Court agreed to hear the case because of contrasting opinions from federal appeals courts around the country regarding the theory of implied certification for False Claims Act whistleblower lawsuits.

In the Court’s ruling in favor of the plaintiffs, Justice Thomas wrote that when “a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant’s representations misleading with respect to the goods or services provided.” The court rejected arguments made by the defendants that liability under the False Claims Act should only be imposed in cases where conditions that were “expressly designated” as “conditions of payment” by the government have been violated.

The Court’s ruling in favor of Rivera’s parents rejected arguments made in amicus briefs filed by a number of leading medical industry groups, including the American Medical Association, the American Hospital Association, and the Pharmaceutical Research and Manufacturers of America, which opposed applying the theory of implied certification to False Claims Act whistleblower lawsuits. Amicus briefs in support of the defendants’ arguments were also filed in the case by CTIA—The Wireless Association, The Association of Private Sector Colleges and Universities, and the Chamber of Commerce of the United States of America.

Qui Tam Whistleblower Lawsuits Filed by Heygood, Orr & Pearson

Qui tam whistleblower lawsuits can be an important tool for fighting health care fraud involving Medicare or Medicaid claims, as well as fraud against other branches of the federal government. Plaintiffs who file qui tam lawsuits may be eligible to recover between 15 and 30% of any damages obtained by the federal government. Whistleblower lawsuits filed under the False Claims Act have recovered more than $40 billion for taxpayers, and paid more than $4 billion to the whistleblowers who took legal action.

Anyone who has information that a business or person has knowingly submitted a fraudulent claim to any branch of the government can potentially help file and pursue a lawsuit under the False Claims Act. The whistleblower in these cases does not have to have been personally harmed; they just need to be aware of the false or fraudulent conduct. If money is recovered from a settlement or from a court judgment, the whistleblower who helped initiate the lawsuit can potentially recover up to 30% of the total amount recovered.

The law firm of Heygood, Orr & Pearson has experience handling whistleblower claims. For example, our lawyers successfully negotiated a $1.75 million award for a whistleblower in a large tax fraud case. Our attorneys have the knowledge and experience to ensure that whistleblowers receive the highest possible compensation for pursuing fraud allegations involving government agencies.

For more information about filing a lawsuit involving intellectual property matters or whistleblower allegations, contact the lawyers at Heygood, Orr & Pearson for a free legal consultation. You can reach us by calling our toll-free hotline at 1-877-446-9001, or by following this link to our free legal consultation form and answering a few simple questions to get started.

by Eric Pearson

Eric Pearson is a licensed attorney and a partner at HO&P who handles commercial and personal injury lawsuits. Eric has been selected to the Super Lawyers List, a Thomson Reuters publication.